Though many companies have increased their internal audit budgets, the survey said that 44 per cent companies confirmed that fraud-detection procedures are not included in the work plan for most audits, while 36 per cent of them said they do not account IT risk assessments in their annual audit plans.
Though IT systems are backbone of operations in most companies, the India Internal Audit Survey 2009 showed that there is a dearth of IT auditors and a low percentage of firms perform an IT risk assessment before finalising their internal audit plans.
This means that firms need to revamp the functioning and involvement of audit committees in overseeing the audit function and see if there is proper implementation of audit recommendations, the survey said.
"Deeper involvement of audit committees is essential to improve the perception of the importance and quality of work delivered by the internal audit function," E&Y partner and national director Ram Sarvepalli said.
The survey, which reflects the views of audit committee members and heads of finance representing a hundred companies, said only 53 per cent companies surveyed involved audit committee in resolving audit issues and implementing its recommendations.
However, 48 per cent companies reported increase in internal audit budgets despite the financial slowdown, the E&Y said.
It added that the slowdown and more focus on governance has added more items to the agenda of internal audit, which is now expected to assist in cost reduction activities in 54 per cent companies surveyed.
Capturing the trends in the Indian internal audit profession, the survey said the role of internal audit should evolve in order to meet the dynamic challenges of the industry.
The survey found that only 44 per cent head of internal audit reported to audit committees while a significant 57 per cent reported to the CEO or the CFO.
A mere 30 per cent of the companies affirmed that their audit committees meet their internal auditors at every audit committee meeting.